Iran War May Erase Most of Reeves’ Buffer, UK Study Says (1)

The war in Iran could wipe out most of Rachel Reeves’ fiscal buffer, according to new research pointing to a £16 billion ($22 billion) hit to Britain’s public finances.

The Resolution Foundation said the conflict would erase almost three-quarters of the Chancellor of the Exchequer’s headroom against her key fiscal rule under a “severe but plausible scenario” in the Middle East conflict.

The calculations looked at a scenario where some of the market movements since the outbreak of war stick, leaving interest rates 0.5 percentage points higher and UK GDP 0.9% lower in three years’ time than otherwise.

While ...